Research | An assessment of the North Carolina county distress rankings

A new report is out that evaluates North Carolina’s County Distress Rankings, known as tiers, established in 1987 to promote economic development in less prosperous areas.

Under the current system, the North Carolina Department of Commerce assigns the state’s 100 counties to one of three tiers each year based on four input metrics:

1. Average unemployment rate,
2. Median household income,
3. Percentage growth in population, and
4. Adjusted property tax base per capita.

Here you can see the current tiers.

The report provides background and context, stakeholder insight into the system’s effectiveness, and comparison with alternative models in South Carolina, Virginia, Alabama, and Texas.

Here are the report’s key findings:

• Stakeholders do not have deep understanding of the system and are unclear on its goal.
• The system has little impact on economic development deals.
• The system was developed for a narrow application within one economic development incentive program but is now used across an unknown array of state and nongovernmental programs, for which it was not designed or intended.
• County tier category sizes are arbitrary, making the groupings imprecise; the designations do not accurately capture the need for support, and stakeholders have mixed ideas on what their designations mean.
• The calculation method itself blurs real differences in the underlying data, making the resulting categorizations almost meaningless.
• North Carolina is the only state using a county tier system with broad application.
• Changing the input factors will not fundamentally change the system.
• Stakeholders believe that developing tailored systems for specific uses would be a more meaningful and effective approach.

The findings suggest that the tiers system, as currently structured, does not serve as an effective tool for economic development. Stakeholders have expressed a need for alternative models that are more tailored to specific policy goals.

The report highlights several questions for future research:

What would be the effect of using a system based on local nomination/designation? 

How many and what kinds of programs are currently using the Tiers designations, and in what ways?

What would it mean for North Carolina to do away with this system, and what, if anything, is the cost of continuing it?

What are the statistically significant differences between counties in terms of economic conditions and capacity?

What do stakeholders see as the primary goal of an economic development designation system?

What factors are most important to business decisions about entering and expanding in North Carolina?

What would be the effect of using an index-based system?

By rethinking how economic distress is measured and addressed, North Carolina has an opportunity to implement more strategic and equitable solutions for economic growth. 

The study was funded by the North Carolina Collaboratory and conducted by NCGrowth and ncIMPACT as preliminary research for policymakers.

Here is the full report:

Carolyn Fryberger

Carolyn Fryberger is the associate director of economic development for NCGrowth, an economic development center at UNC Chapel Hill.

Anita Brown-Graham

Anita Brown-Graham is the Gladys Hall Coates Distinguished Professor of Public Law and Government, an associate dean for strategic initiatives, and the director of the ncIMPACT Initiative.

Hallie Springer

Hallie Springer is a research assistant at ncIMPACT, an initiative of the UNC School of Government.

Jennifer Yip

Jen Yip is a technology and media veteran who lives at the intersection of business, social sciences and data. Jen is currently pursuing her MPA at NC State University.